The investment allowance, which will apply across the North Sea basin, has been set at 62.5 percent of such expenditure from April 1 and can be set off against profits subject to the supplementary tax rate. It supports the development of "high pressure, high temperature" projects such as Culzean, which tend to involve heavier capital expenditure.
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Last week, by contrast, Maersk said it would approach the U.K. Oil and Gas Authority to seek approval to cease production at its Janice installation, a decision that puts 200 jobs at risk. Output would cease in the second or third quarter of next year.
Output on the U.K. continental shelf, despite record investment in recent years, has been sliding since 2000. Oil & Gas UK.. says that it dropped another 1 percent last year to 1.42 million barrels of oil equivalent a day, versus a peak of 4.5 million boe/d 15 years ago. Exploration has all but ceased.
A fifth of production, or a third of fields, is now unprofitable, says the industry group. Cash losses, or the deficit after subtracting costs from revenues, topped £5 billion last year, the biggest shortfall since the 1970s.